Dollar Hegemon Comes for Indonesia. Who Is Next?
Jakarta wanted to shock legions of currency bears and stem the rupiah’s decline. In doing so, the central bank showed how few options it has.
Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously, he was executive editor for economics at Bloomberg News.
Show me the money.
Photographer: Dimas Ardian/BloombergGoodbye helping hand, hello shock therapy. Central banks in Asia are entertaining muscular tactics to shore up faltering currencies. That means dispensing with carefully crafted words designed to convey attentiveness without locking officials into drastic steps that might well punish bears — and the economy. Something more arresting is required.
With the dollar’s persistent strength sweeping away predictions of a good year-end for emerging-markets, the greater risk is that governments under-react. Letting currencies weaken too much can jeopardize financial stability and fuel inflation. Indonesia got the message.
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Dollar Hegemon Comes for Indonesia. Who Is Next?